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My Post-It Note Trading Plan
"Simplicity is the ultimate sophistication."
...Leonardo da Vinci
How detailed should your trading
plan be?
There is of course no right
answer apart from whatever works best for you. Some people need detail - lots of
it. Others will never need more than a single page, with anything longer simply
gathering electronic dust as it sits unread on your hard-drive.
But here's my thoughts...
You need to create both!
-
A large detailed
plan
-
A small
conceptual plan
Why?
Well, firstly, even if all you
want is a small summary plan, then you can't properly write that unless the
detailed one is produced first. To be
effective, a small plan must summarise the key components of a thorough and
detailed plan.
But there is a deeper reason as
well... the process of producing both versions will
provide you with increased clarity regarding both how you trade and why your
plan should work.
Produce a large and detailed plan because the process of getting every aspect of
your trading business onto paper will ensure a thorough and detailed knowledge
of your business operations; increasing likelihood of considered and pre-planned
actions rather than emotional and unplanned reaction to price movement. It
doesn't matter if you don't refer to it again, preferring to use your summary
version. It's the process that is important.
Produce a single page summary because the process of simplification helps cement
in your mind a deeper understanding of the key aspects of your plan. It doesn't matter if you prefer to work from a detailed plan
in future; again, it's the process that is valuable.
I also recommend you take it one step further:
-
You need to be
able to define your whole trading approach in one short
paragraph; something that fits on a Post-It Note*.
Why?
It creates a perfect summary
reminder that can sit attached to your monitor, to keep you on the right path.
But more importantly, as before,
the process of doing this should provide a deeper level of understanding as to exactly how you're trading.
To reduce it to a single
paragraph, I want you to go to a higher conceptual level - not just what you're
doing, but why.
If you can't do this, and fit it
on a Post-It Note, I'd suggest you need more work on your trading plan;
particularly in understanding why your plan should work.
Here's mine... a one sentence
summary of the 590 page
YTC Price Action Trader...
So... get a Post-It Note. And get
writing!
Cheers,
Lance Beggs.
* Post-It is a registered trademark of
3M
NOTE: If you want some excellent beginner's
guidance on the creation of a trading plan, get a copy of "Trading Plans made simple" by
Jacqueline & Davin Clarke:
http://www.tzarcorp.com/Trading-plans-made-simple.html
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